When the public gets to hear of a brown envelope having been handed
over, it is usually the recipient of the bribe who attracts the most
opprobrium, as the beneficiary from ill-gotten gains. But in the recent
and unconnected corruption allegations surrounding BAE Systems and
Siemens – two of Europe’s biggest companies – the spotlight has focused
not on bribe-takers, but on bribe-payers and their accessories.
In neither case are the executives involved accused of personal
enrichment. Those running Siemens’ alleged €420million ($553m, £284m)
slush fund for its telecoms division, or BAE Systems’ £40billion
($78bn) Saudi arms contract, sought only to benefit their companies. Of
course, rational and ambitious managers will assist in corruption if
they think it will help them to advance in the organization, and there
will always be individual rogues. But such behaviour has to be accepted
company practice in order to persist and reach major dimensions. In
other words, it has to be part of the corporate culture. To that
extent, corporate social responsibility – coming from the very top and
enforced throughout the company – plays a vital role in determining how
people behave.
But these cases transcend corporate culture. Germany has form in
company corruption – Volkswagen and DaimlerChrysler are also under
scrutiny – and before the OECD’s anti-bribery convention was
incorporated into national law, businesses were even allowed to take
tax deductions for bribes paid to foreign officials.
The UK government, on the other hand, has prided itself on being in the
vanguard of promoting responsible business practice. The Extractive
Industries Transparency Initiative it helped to establish has indeed
shed light on corruption in the oil, gas and mining sectors,
particularly in developing countries. Now, by halting the Serious Fraud
Office probe into allegations of bribery in connection with Saudi
Arabian arms contracts, on the ground that the wider public interest
outweighed ‘the need to maintain the rule of law’, the government has
abandoned all pretence of moral probity, because commercial corruption
can never be in the public interest. Thoughtful investors, such as
F&C Asset Management, Hermes and Morley Fund Management, have
pointed out the damage done to the UK’s business reputation.
To re-establish a level playing field – for what goes for BAE Systems
must surely go for all UK companies – the government would need to
declare bribery legal. In view of its proposals to neuter, for all
practical purposes, the 2005 Freedom of Information Act in order to
save on the cost of answering inquiries, the idea is not too
far-fetched. In effect, it has already done so. These are alarming
developments that call for protest from everybody concerned for the
integrity of the market.
